Kenya Revenue Authority informs the public on changes of tax rates introduced through the Tax Laws (Amendment) No. 2 Act of 2020 which was published on 24th December, 2020 with respect to employment income, Corporation Tax, and Legal Notice No. 206 of 2020 on Value Added Tax. The new tax rates replace those introduced in April 2020.
Individual Income Tax Rates
The following tax rates shall apply to individual income with effect from 1st January, 2021. The first monthly PAYE return under the new rate shall be due by 9th February, 2021.
Individual Income Tax Bands and applicable rates
|Tax Band||Rate of Tax|
|On the First KShs 24,000 per month or KShs 288,000 per annum||10%|
|On the next KShs 8,333 per month or KShs 100,000 per annum||25%|
|On all income amounts in excess of KShs 32,333 per month or KShs 388,000 per annum||30%|
The applicable monthly personal relief is KShs 2,400 per month or KShs 28,800 annually.
Pension Tax Bands
|Pension Bands||Annual Tax Rates|
|Any amount in excess of tax free amounts:|
|On first KShs 400,000||10%|
|On next KShs 400,000||15%|
|On next KShs 400,000||20%|
|On next KShs 400,000||25%|
|On any amount in excess of KShs 1,600,000||30%|
For pension income withdrawn before expiry of 15 years of pensionable service, the new individual tax bands and rates are applicable on any amount withdrawn in excess of tax-free amount.
The rate of Corporation Tax is 30% of taxable income with effect from 1st January, 2021.
Value Added Tax
The rate of Value Added Tax is 16% with effect from 1st January, 2021. The first return under the new rate is due by 20th February, 2021.
The rate of Minimum Tax is 1% of the gross turnover effective 1st January, 2021. The tax shall be payable by the 20th day of the 4th, 6th, 9th and 12th month of the accounting period. However, the Tax Laws (Amendment) No.2 Act, 2020, introduced the following additional exemptions from Minimum Tax:
- Persons engaged in business whose retail price is controlled by government
- Persons engaged in insurance business
Detailed guidelines on implementation of Minimum Tax are available on the KRA website: www.kra.go.ke
For further clarification and facilitation, please call the Contact Centre on Tel: 020 4 999 999, 0711 099 999 or Email: firstname.lastname@example.org www.kra.go.ke